2.306 -Deduction for Excess First-Year Depreciation

Item

Description

FY2012

FY2013

FY2014

2.306

Deduction for Excess First-Year DepreciationTaxpayers may elect to expense certain business assets purchased during the taxable year. American Taxpayer Relief Act of 2012 (enacted January 1, 2013) increased the benefits, making changes to IRC sec. 179. For tax year 2012, Massachusetts adopts the increased federal amounts provided by IRC sec. 179. Hence, the total deduction cannot exceed $500,000; for taxpayers whose investment in eligible assets exceeds $2,000,000 in the year, the $500,000 ceiling is reduced by $1 for each dollar of investment above $2,000,000. Any remaining cost may be depreciated according to MACRS as described in item 2.305. The immediate deduction constitutes a tax expenditure, resulting in a deferral of tax or an interest-free loan.